LatAm credits end near intra-day highs

Davide Scigliuzzo

3 MIN. DE LECTURA

NEW YORK, March 23 (IFR) - Latin American credits enjoyed strong buying on Monday as several investors sought to add risk in anticipation that US interest rates will not rise as aggressively as they had feared.

"A lot of this stems from the change in risk appetite post the Fed," said a sovereign bond trader in New York. "People were very defensive going into the Fed meeting. We have had a key reversal."

Brazilian credit spreads tightened by 10bp to 15bp across the board today, outperforming some investment-grade countries in the region.

In the corporate space, bonds issued by Brazilian state-run oil company Petrobras ended the session between 20bp and 30bp tighter in spreads, with the 2024s last quoted at 545bp-535bp and the 2044s quoted at 550bp-540bp.

"Everything is rallying and we are closing at the tights of the day," said a New York-based corporate bond trader focusing on Brazil.

Higher-yielding notes such as construction company Odebrecht's 2042s, meanwhile, jumped three points in price to end the day at 75.5-76.5, according to the trader.

Buying appetite appeared well distributed across credit ratings and maturities.

"We are seeing good duration buying out of insurance companies, rates buyers at the front of the curve and dedicated EM buyers in the middle," said the trader.

"Investment grade sovereigns are still 300bp wide to the US, which is 150bp wide to German Bunds. Valuations are still compelling."

This all resulted in a particularly conducive backdrop for Colombia, which was set to price a US$1bn reopening of its 5% 2045 notes at Treasuries plus 253bp, after receiving around US$4.5bn in demand.

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Colombia Telecomunicaciones (ColTel), Colombia's second-largest telecommunications company, has hired BBVA and HSBC as structuring advisors as well as joint bookrunners along with Citigroup and Credit Suisse to arrange a series of investor meetings in the US, Europe and Asia.

A US dollar-denominated 144A/Reg S hybrid bond transaction may follow. The issuer is rated BB/BB, while the hybrid bond is expected to be rated B+/B. ColTel is 70% owned by Spain's Telefonica S.A. and 30% owned by the Republic of Colombia. Meetings kicked off last week and will continue until Tuesday.

In Peru, Mexican media company TV Azteca is expected to bring to market a project bond related to the development of Peru's fiber optic network as soon as this week. (Reporting by Davide Scigliuzzo; Editing by Natalie Harrison)